What is the home loan settlement period?
Settlement Day is when the buyer pays the rest of the purchase price (on top of the deposit already paid), usually using a home loan, and the final legal documents are exchanged. The buyer and seller do not usually attend settlement in person; it is their appointed legal representatives (solicitors or conveyancers) who attend on their behalf to finalise the sale. After settlement, the buyer is the legal owner of the property.
When does settlement happen?
It depends on what type of property you are buying, and what has been decided between the vendor (the person selling the house) and you, the buyer.
Settlement usually takes place around 30 days, or longer, after the contracts have been exchanged. However, sometimes you might see a settlement as short as 10 business days after the auction, written in the sales and particulars, for example. Buyers who are buying off-the-plan where the property does not exist yet may find that the sale does not settle for another 1 to 2 years after paying the deposit.
Prior to the settlement date, you will also have the chance to go and look at the property for a “pre-settlement inspection”, along with your agent. This final check means you can ensure all fixtures and appliances that are part of the sale, are in the same condition as when you agreed to buy the property.
This inspection takes place about a week before the settlement date, so that you have the time to go back to your vendor if any damage has occured. In this instance, negotiations would happen around whether fixes need to take place, or whether some money needs to be discounted from the remaining
What happens at settlement?
At settlement, it may sound strange but the buyer and the seller do not usually attend. They don’t need to – their conveyancers or solicitors handle it for them. This is because of the sheer volume of legal documents that need to be prepared and on hand for settlement; it would be a time-consuming and extremely risky exercise to prepare for settlement on your own.
What happens after settlement?
After settlement, your lender draws down your loan, meaning they pay the remaining purchase price using your loan and you start owing the lender.
Conveyancing solicitors should send a final letter confirming for the buyer that settlement was completed and the money was sent and received correctly. These days, a copy of that letter is emailed to the buyer so that they don’t have to wait for it to arrive in the post before moving in.
If you didn’t already have home and contents insurance organised for your new home pre-settlement, now’s the time to get it organised.
And then, finally, after all the open homes and the sleepless nights, you can finally start setting up your nest.
It’s time to pop the bubbles!
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